Transcript
  • West Pharmaceutical Services, Inc.June 2016

  • Cautionary Statement Under the Private Securities Litigation Reform Act of 1995This slide presentation and any accompanying management commentary contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about product development and operational performance.Each of these statements is based on preliminary information, and actual results could differ from any preliminary estimates. We caution investors that the risk factors listed under Cautionary Statement in our press releases, as well as those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by our quarterly reports on Form 10-Q, could cause our actual results to differ materially from those estimated or predicted in the forward-looking statements. You should evaluate any statement in light of these important factors. Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

    Non-U.S. GAAP Financial MeasuresCertain financial measures included in these presentation materials, or which may be referred to in managements discussion of the Companys results and outlook, have not been calculated in accordance with U.S. generally accepted accounting principles (U.S. GAAP), and therefore are referred to as non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation or as an alternative to such measures determined in accordance with GAAP. Please refer to Reconciliation of Non-GAAP Measures at the end of these materials for more information.

    TrademarksRegistered trademarks used in this report are the property of West Pharmaceutical Services, Inc. or its subsidiaries, in the United States and other jurisdictions, unless noted otherwise. Daikyo Crystal Zenith is a registered trademark of Daikyo Seiko, Ltd. Verux Brand and the logo are trademarks of West Pharmaceutical Services Singapore Pte. Ltd. in Singapore and other jurisdictions.

    Safe harbor statement

    2

  • By your side

    Pharmaceutical, biotechnology, generic and medical device companies trust West and our ability to deliver consistent high quality and technologically advanced containment and delivery solutions.

    We share their commitment to improving health for patients worldwide.

    Our mission

    3

    Become the world leader in integrated containment and delivery of injectable medicines

  • 4

    Injectable market

    30 Billion Units

    $284 Billion of Annual

    Drug Sales

    $7-8 BillionContainment &

    Delivery Product SalesSource: IMS and Company estimates

  • An integral part of the healthcare industry

    Top 35Injectable biologics rely on West and

    Daikyo components

    ~ 40 BillionComponents manufactured

    annually

    Top 75Supplier to the top 75

    pharmaceutical & biotech injectable companies

    5

  • Components manufactured

    6

    Every Dose | Every Time | 100% Commitment

    40 BillionANNUALLY

    110 MillionPER DAY

    5 MillionPER HOUR

    76,000PER MINUTE

  • 2015 Sales$1.4 billion

    2015 Sales$1.4 billion

    2015 Net Sales by Geography

    West business at a glance

    7%

    39%

    33%21%

    Americas

    Europe, Middle East, Africa

    Asia Pacific

    2015 Net Sales by Category

    2016E Sales(*)by Market Group

    53%40%

    7%

    High-Value Components

    Standard Packaging

    Delivery Devices

    Contract Manufacturing

    PRO

    PRIE

    TARY

    PR

    ODU

    CTS

    Pharma

    Generics

    Biologics

    Contract Manufacturing

    20%

    20%

    30%

    30%

    (*) Company expectations and approximate percentages 7

    PRO

    PRIE

    TARY

    PR

    ODU

    CTS

    2016E Sales$1.49-$1.51

    billion

  • The customers we serve

    8

    2016 Expected Organic

    Sales Growth 6-8%

    20%

    20%

    30%

    30%

    Biologics

    Contract Manufacturing

    Pharma

    Generics

    Source: Company expectations and approximate percentages

    More than 2,000

    customers

    Global customer

    base

    About 2,400 injectable products are in the

    development pipeline

    Top 125 customers make up

    95% of sales

  • Proprietary Products

    StoppersSealsCaps

    Syringe ComponentsDaikyo CZ Vials & Syringes

    Reconstitution SystemsSelf-Injection Devices

    Wests role in delivering medicines to patients

    Contract Manufacturing

    Engineering

    Injection Molding

    Project Management

    Tooling

    $0.3B$1.1B

    ~8,000 productSKUs

    9

  • Long-term strategy

    10

    Market Led and Customer Experience

    Operational Excellence

    Product and Service Differentiation

    Drive Shareholder Value

    Become the world leader in integrated containment and delivery of injectable medicines

  • Addressing unique needs

    11

    Quality A High Bar Set By Our Customers

    GENERICS

    Speed to market

    Efficient manufacturing

    BIOLOGICS

    Packaging solutions for

    sensitive molecules

    Self-injection technologies

    PHARMA

    Total cost of ownership

    Life cycle management

    Quality manufacturing

    Design for manufacturing

    CONTRACT-MANUFACTURED

    PRODUCTS

    Patient Focus

  • West solutions: Integrated containment & delivery

    12

    Increasing levels of customer intimacy

    Increasing value to West

    STERILIZED

    WASHED

    COATED

    ADMINISTERED

    CAMERAINSPECTED

    QUALITY BY DESIGN

    CONTAINMENT

    SELFINJECTION

    CONTRACT MANUFACTURINGINJECTION MOLDING

    CONTRACT MANUFACTURINGMULTI-COMPONENT ASSEMBLY

  • Circles reflect relative size of 2015 net sales

    Standard Packaging

    High-Value Components

    0%

    5%

    10%

    15%

    20%

    0% 30% 60%

    2015 Category Gross Margin %

    Proprietary Devices

    Contract Manufacturing

    2015 GM 32.6%5-Yr Sales CAGR 6.7%

    Product net sales & margin growth2011-2015 compound annual net sales growth rates (excludes currency)

    > High-Value components have driven growth

    > Proprietary devices present significant growth opportunity

    > Steady Contract Manufacturing and standard packaging businesses

    5-Ye

    ar C

    AGR

    13

    0%

  • Deep technical expertise

    14

    ~2,500Employees have worked 10+ years

    >65Projects in

    development

    >850Issued patents and

    pending patent applications

    12Number of R&DInnovation Sites

  • Innovation & TechnologyCurrent Developments

    15

    Container Systems NovaPure 1-3 mL Verux launch Flip-Off Seal RS/RU Crystal Zenith platform

    launches

    Delivery Systems SmartDose development Innovation Center in Israel Patient-centric approach

  • West solutions: Next generation delivery

    16

    Customization

    Dosages ranging from 1 mL 10 mL

    Preloaded & pre-sterilized

    Patient-centric approach

    Customer process simplification

  • First quarter 2016 summary results($ millions, except earnings per-share (EPS) data)

    17(1) Please refer to Reconciliation of Non-GAAP Measures at the end of these materials for more information.

    Three Months Ended March 31,

    2016 2015 Reported Net Sales $362.1 $335.9 Net Sales at Constant Currency(1) $371.2 $335.9 Gross Profit Margin 34.0% 32.7% Reported Operating Profit $30.0 $47.8 Adjusted Operating Profit(1) $55.6 $47.8 Diluted EPS $0.30 $0.45 Adjusted Diluted EPS(1) $0.53 $0.45

    10.5% constant-currency sales growth

    Excluding adverse currency impact of approximately $0.02,Adjusted Diluted EPS grew 24%

    ($ millions, except per-share data)

    Three Months Ended

    September 30March 31,

    20152016

    20142015

    Reported Net Sales

    $ 344.5362.1

    $ 355.9335.9

    Net Sales at Constant Currency(1)

    $ 374.5371.2

    $ 355.9335.9

    Gross Profit Margin

    31.434.0%

    30.932.7%

    Reported Operating Profit

    ($ 3.5)30.0

    $ 44.047.8

    Adjusted Operating Profit(1)

    $ 45.555.6

    $ 45.247.8

    Diluted EPS

    $ 0.300.02

    $ 0.430.45

    Adjusted Diluted EPS(1)

    $ 0.440.53

    $ 0.440.45

  • 18

    Proprietary Products, 80% of total sales

    BIOLOGICS

    Double-digit organic sales growth

    GENERICS

    Double-digit organic sales growth

    PHARMA

    Mid-single digit organic sales growth

    Low-single digit organic sales growth

    CONTRACT-MANUFACTURED

    PRODUCTS

    Q1 2016 Highlights

    20% of total

    High-Value Product Offerings +22% organic sales growth

  • 2016 Full-year guidance ($ millions, except EPS - Non-GAAP) (1) (2)

    19

    Estimated 2016 Revenue

    Estimated Gross Profit %

    Proprietary Products $1,180 - $1,190 37.7% to 38.2%

    Contract-Manufactured Products $310 - $320 17.4% to 18.4%

    Consolidated $1,490 - $1,510 33.5% to 34.0 %

    Est. Capital Spending $150 - $175

    Est. Adjusted Diluted EPS (1) $2.12 to $2.25 per share

    Est. Reported Diluted EPS (1) (2) $1.76 to $1.99 per share

    (1) Guidance includes various currency exchange rate assumptions, most significantly the Euro at $1.12 for the remainder of 2016.Actual results will vary as a result of variability of exchange rates, among other items.

    (2) Estimated reported diluted EPS includes estimated restructuring charges of $0.23 to $0.28 per share and estimated Venezuela currency devaluation charge of $0.03 to $0.08 per share.

  • 20

    Strong Operating Cash FlowCapital Allocation Priorities: Investing in our business Dividends Inorganic growth Debt repayment Stock repurchase

    Cash-flow and allocation

    Artist rendering: new plant in Waterford, Ireland

  • Building for the Future

    Market-led strategy addressing the specific needs of pharmaceutical, biotechnology, generic and medical device customers

    Strong competitiveposition with high barriers to entry Quality culture

    Designed into regulated products

    Scientific and technical expertise

    Global Operations expanding capacity to meet growing customer demand

    Proprietary products and contract manufacturing expected to drive net sales growth and margin expansion

    Financial strength to invest

    Strong balance sheet and increasing operating cash flow

    21

    Innovations in integrated containment and delivery driving new products and services for long-term growth

    Create Value for Customers, Patients, Employees and Shareholders

  • Appendix:Reconciliation of non-GAAP measures

    22

    2015 2014 2013 2012 2011

    Diluted EPS Reported (GAAP) $1.30 $1.75 $1.57 $1.15 $1.08

    Pension settlement charge 0.43 - - - -

    Executive retirement and related costs 0.09 - - - -

    License costs - 0.01 - - -

    Discrete tax items 0.01 0.02 0.06 0.03 0.02

    Restructuring, impairment and related charges - - - 0.05 0.05

    Acquisition-related contingencies - - - 0.01 (0.01)

    Extinguishment of debt - - - 0.14 -

    Special separation benefits - - - - 0.03

    Diluted EPS Adjusted (Non-GAAP) $1.83 $1.78 $1.63 $1.38 $1.17

  • Reconciliation of Net Sales to Net Sales at Constant Currency(1)

    (1) Net sales at constant currency translates the current-period reported sales of subsidiaries whose functional currency is other than the U.S. dollar at the applicable foreign exchange rates in effect during the comparable prior-year period.

    ($ million, except EPS data)Reconciliation of Reported and Adjusted Operating profit, Net Income and Diluted EPS

    23

    Three months ended March 31, 2016Operating

    profit

    Income tax

    expenseNet

    incomeDiluted EPS

    Reported (GAAP) $30.0 $6.9 $22.1 $0.30Restructuring and related charges 22.9 7.9 15.0 0.20Venezuela currency devaluation 2.7 0.2 2.5 0.03Adjusted (Non-GAAP) $55.6 $15.0 $39.6 $0.53

    Three months ended March 31, 2016 Proprietary CM Eliminations TotalReported net sales (GAAP) $290.8 $71.6 $(0.3) $362.1Effect of changes in currency translation rates 8.9 0.2 - 9.1Net sales at constant currency (Non-GAAP)(1) $299.7 $71.8 $(0.3) $371.2

    Appendix:Reconciliation of non-GAAP measures

  • (1) Please refer to Notes to Non-GAAP Financial Measures in Wests April 28, 2016 press release.

    (2) Guidance includes various currency exchange rate assumptions, most significantly the Euro at $1.12 for theremainder of 2016. Actual results will vary as a result of exchange rate variability.

    Reconciliation of adjusted diluted EPS guidance to reported diluted EPS guidance

    24

    Full Year 2016 Guidance(1) (2)

    Adjusted diluted EPS guidance $2.12 to $2.25Estimated restructuring chargesEstimated currency devaluation (Venezuela)

    (0.23 to 0.28)(0.03 to 0.08)

    Reported diluted EPS guidance $1.76 to $1.99

    Appendix:Reconciliation of non-GAAP measures

    West Pharmaceutical Services, Inc.Safe harbor statement Our missionInjectable market An integral part of the healthcare industry Components manufacturedWest business at a glanceThe customers we serveWests role in delivering medicines to patientsLong-term strategyAddressing unique needsWest solutions: Integrated containment & deliverySlide Number 13Deep technical expertiseInnovation & TechnologyCurrent DevelopmentsWest solutions: Next generation deliveryFirst quarter 2016 summary results($ millions, except earnings per-share (EPS) data) Q1 2016 Highlights2016 Full-year guidance ($ millions, except EPS - Non-GAAP) (1) (2)Cash-flow and allocationBuilding for the FutureAppendix:Reconciliation of non-GAAP measuresAppendix:Reconciliation of non-GAAP measuresAppendix:Reconciliation of non-GAAP measures


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